Managed Funds for Beginners | Mike Heath on the RaboPlus Blog

While there is a lot of publicity around managed funds, I'd love to see Rabo Bank offer share index trackers as an alternative because of their advantages of low cost and good performance.

My understanding was that the trick to investing in managed funds was buying and selling at the right times. With your regular managed funds investor plan, one has to buy at fixed times regardless of whether or not it is the best time to buy. Wouldn't it be better and more interesting to make the plan more sophisticated by allowing investors to create settings whereby the system automatically delays buying till prices fall to a certain level, and also sells automatically when prices rise above a certain level? Or even if the system didn't do the actual buying and selling, it could simply generate an alert to indicate that the investor had predetermined that they should consider buying and selling at the times the alerts are generated.

David, thanks for taking the time to provide this suggestion. We constantly review our range of funds and fund managers, and in fact have some new ones coming on to our platform in a few months time. We’ll make sure your suggestion is included in our ongoing analysis.

Mark, the most commonly held opinion on managed funds investing is that they sit in the longer-end of your investment timeframe and portfolio, with On Call cash being at the nearest or shorter end of the time horizon. They are not typically seen as a trading option (buy low – sell high) and that you invest in funds that best meet your risk profile. Given that your risk profile changes over time (as you get older, your broader financial circumstances change etc) you should at least review your investments annually, to see that the funds chosen still “fit” your risk profile. Managed funds investments are typically seen as meeting your income/capital requirements in the period 10 years plus out – not typically a short-term trading vehicle. Given this, whilst your suggestion clearly has merits, it doesn’t fit the roadmap we have for our managed funds offering.

If you invested in a managed fund and for some reason needed that money, how easy is it to get it back? & would you necessarily get the amount you invested?

Fiona, thanks for the question. Selling units in Managed Funds is as easy and as straight forward as purchasing them, you simply follow the appropriate screens once you have logged on. Once sold, and we have the cash from the fund manager (note different funds have different settlement periods and can take up to a week to receive cleared funds from the fund manager) we credit your Master Savings Account and you can then transfer it out to your nominated account. With regards to how much money you’ll get back, it’s a function of the sell price for the unit and if there are any exit fees charged (these differ by fund and so you should check the Fund Selector for details). I trust this answers your questions. Should you wish to have a chat with one of our team about this or any other matter don’t hesitate to call us 0800 22 44 33 between 8am and 5pm Monday to Friday.

I would think that most investors right now are totally suspicious of any investment vehicle including managed funds. Recent history has questioned what a "safe" investment really looks like. Even investing in banks looks a bit dicey at the moment and it would only need one to tip over and all hell would break loose. For my money timing entry into funds is a no-go. Criteria for selection of any particular fund or group of funds seems like a gamble in itself so I would be interested to hear how you suggest one does select such funds and what performance most of them have yielded over the past couple of years. And I dont mean choosing the fund when it was at its low and then calculating what it did when it peaked. From the little that I know it does seem that one useful counter-cyclical criterion may be to invest in the "dogs" that have the worst record in the current year and wait for them to recover. I'd be interested in your comments. Max

Max, over the coming months we shall be running a series of webinars, the first one of late last year can be found here, for customers who want to get started in managed funds, and are looking for the information needed to help decide how, when and what etc. We are also developing a new tool which will help you identify your risk profile and therefore what types of managed funds best suit your risk profile. Please keep an eye out for both of these developments (note that you need to subscribe to ActiveMoney to receive the invitations). Over and above the information and tools we provide I would also recommend you engage a financial adviser for expert advice.